According to data, Uniswap is 36% overvalued, while SushiSwap trades at a discount.

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According to an exchange token valuation technique, SUSHI trades at a 33% discount while the UNI price is 36% overvalued.

Conclusion: When compared to other exchange tokens, the token is the main asset.

Despite the fact that there is no direct correlation between Binance’s exchange volume (or revenue) and token economics, traders appear to use it as a proxy. Since April 2019, when the exchange modified the BNB whitepaper, the contentious burn mechanism has been losing traction.

 

Exchange tokens market cap and volume. Source: Messari Screener and CoinGecko

However, excluding the 60 million BNB that have never been in circulation drastically changes the outcome because these excess tokens are meant to be burned over time.

The remaining exchange tokens are inflationary, meaning the issuing rate is very steep. For example, Uniswap (UNI) has 611 million tokens in circulation, but that number is expected to reach 1.14 billion in 10 years.

BNB price (above) and Binance exchange daily volume (below). Source: TradingView and Nomics

How BNB differs from the other exchange tokens

BNB has an actual use case apart from trading fee rebates, and it is the primary asset pair on the Binance Smart chain. BNB captures a portion of the $17 billion total value locked in the BSC smart contracts, and it has decent market share and representation on decentralized exchanges. As a result, the network creates perpetual demand for BNB.

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Should analysts underestimate the value of BNB by 50% when compared to other exchange tokens based on these simple figures? As previously said, the market appears to be pricing BNB based on Binance exchange volume, thus using that as a valuation proxy makes logical.

Uniswap has a daily volume of $1.63 billion, despite the fact that it only offers spot markets. As a result, the value is comparable to Binance’s $24.3 billion average, excluding futures markets.

Using Uniswap’s lower volume of 93.3 percent, the gross estimate yields a market capitalisation of $10.3 billion based on 50% of BNB’s stated $76.7 billion. As a result, the prediction is 36% lower than the actual data from UNI.

PancakeSwap, the leading Binance Smart Chain’s DEX, has been handling a $750 million in daily volume. Using the same 50% of BNB’s market capitalization methodology, CAKE’s estimated valuation should be $4.73 billion, which is surprisingly in line with the current figure.

FTX and SUSHI are trading at a discount

FTX has amassed $1.7 billion in daily turnover, including derivatives markets, after transitioning to a consolidated exchange. As a result, the indicator can be compared to Binance’s average of $54 billion. Despite its 96.8 percent lower volume, FTX’s gross estimate valuation is $4.83 billion, which is 11% lower than the actual figure.

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Using Huobi’s adjusted $5.4 billion volume and Binance’s total $54 billion daily average volume, including derivatives products, yields an estimated valuation of $15.34 billion. Given Huobi Token’s unusual inflationary nature, it makes sense to apply a significant discount to the claimed market capitalisation.

 

Lastly, Sushiswap aggregates a daily $305 million transaction volume. Considering Binance’s $24.3 billion spot-only data, the same estimate yields a $1.92 billion valuation roughly 33% above the actual figure.

It is important to note that this estimate does not constitute an investment recommendation. This crude and unrefined methodology seeks to demonstrate that traders are effectively using exchange volume as a proxy for native token valuation.

While this strategy may have worked in the past, current regulatory, KYC, and the removal of leverage trading options at centralised exchanges may have an impact on its efficacy in the future.

 

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